2013 election 'will determine future' of local car industry

Date: November 28 2012

Stephen Ottley

THE coming year will determine whether Australia has a long-term, viable car industry, according to the nation's second-biggest car maker.

Holden chairman Mike Devereux believes the co-investment between the government and the local car industry will become a key topic of debate in the 2013 election and will determine the future of the sector.

Mr Devereux also called for an industry review, similar to the ones carried out by politicians John Button in the 1980s and Steve Bracks four years ago, to get a clear vision of the local automotive sector for the long-term.

"It looks like [the car industry] will be an election issue next year," he said. "I believe 2013 will be a year when Australia decides if it wants to have an auto industry or not.''

Holden committed $1 billion to secure local manufacturing until 2022 after the federal government pledged $225 million in support and the South Australian government added $50 million.

''Multinationals need to understand what the long-term signals of a country are, in terms of policy,'' Mr Devereux said. ''At the moment we have political discourse where, basically, whatever one says the other refutes.

"My hope is that it's not an election issue. My hope is that it gets bipartisan support."

The comments were seen as a jab at the Coalition over its recent criticism of handouts to the car industry.

While other industries receive subsidies or tax breaks - including agriculture and education - the funding of car makers has been a political football, with calls for all incentives to be scrapped.

Economists have long argued the Australian car industry lacks scale, and the government grants could have been better spent.

The auto industry faces a number of headwinds including volatile raw materials costs and fuel prices, tighter regulations and increased competition.

Sales of locally made cars have fallen 50 per cent in the past four years, driven by cheaper imports, and consumers shifting away from large passenger vehicles to more fuel efficient vehicles.

The Coalition has ruled out protection for car manufacturers if elected and claims that recent sackings at Ford's Broadmeadows plant show that taxpayer-funded subsidies for the car industry don't work.

Opposition Leader Tony Abbott said this month that the Coalition supported a viable motor industry, but that the government's policy of subsidies ''have let a lot of people down''.

Mr Devereux said he was concerned that the Coalition had not made its long-term position on the automotive industry clear.

"I don't know what their auto policy is," he said.

Regardless of which party wins next year's election, Mr Devereux says before the election is even decided, Holden has to begin spending its promised $1 billion investment to prepare its next generation of cars. But he warned that if the position on co-investment changed, Holden would be forced to reconsider its position before 2022.

Mr Devereux says there will need to be a review of government policy towards the auto industry no matter who gets into government.

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